Correlation Between Columbia Convertible and Barings Active

Can any of the company-specific risk be diversified away by investing in both Columbia Convertible and Barings Active at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Columbia Convertible and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Columbia Convertible Securities and Barings Active Short, you can compare the effects of market volatilities on Columbia Convertible and Barings Active and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Columbia Convertible with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Convertible and Barings Active.

Diversification Opportunities for Columbia Convertible and Barings Active

-0.42

Correlation Coefficient

Columbia Convertible  Barings Active

Very good diversification

The 3 months correlation between Columbia and Barings is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Convertible Securitie and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short and Columbia Convertible is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Columbia Convertible Securities are associated (or correlated) with Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Columbia Convertible i.e., Columbia Convertible and Barings Active go up and down completely randomly.

Pair Corralation between Columbia Convertible and Barings Active

Assuming the 90 days horizon Columbia Convertible Securities is expected to under-perform the Barings Active. In addition to that, Columbia Convertible is 6.24 times more volatile than Barings Active Short. It trades about -0.04 of its total potential returns per unit of risk. Barings Active Short is currently generating about 0.27 per unit of volatility. If you would invest  910.00  in Barings Active Short on December 23, 2024 and sell it today you would earn a total of  17.00  from holding Barings Active Short or generate 1.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Columbia Convertible Securitie  vs.  Barings Active Short

Columbia Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Convertible Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Columbia Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barings Active Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Active Short are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Barings Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Convertible and Barings Active

The main advantage of trading using opposite Columbia Convertible and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Convertible position performs unexpectedly, Barings Active can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Barings Active will offset losses from the drop in Barings Active's long position.

The idea behind Columbia Convertible Securities and Barings Active Short pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.